Bitcoin's price, when plotted on a log-log scale, traces a remarkably straight line over time. This is the signature of a power law - a pattern where one quantity scales as a fixed power of another.
Standard power law trackers show where price sits in the channel today. The two indicators developed here ask a different question: how much weighted history of deviation has accumulated, and what does that imply about where price needs to go?
What Is the Power Law?
The model was rigorously formulated and popularized by physicist Giovanni Santostasi, who showed that Bitcoin's price since genesis follows the form:
On a log-log chart, this becomes a straight line. Bitcoin's price has followed this trajectory across more than fifteen years and six orders of magnitude of price growth.
The Three Bands
Around the regression line, two historically meaningful boundaries have emerged:
| Band | Multiplier | Interpretation |
|---|---|---|
| Support floor | × 0.42 | Lower bound - breached only once in recorded history: March 2020, the COVID crash. |
| Regression line | × 1.0 | Fair value pivot. Price above suggests trimming; below suggests accumulating. |
| Resistance ceiling | × 1.5 | Derived from the Stress Oscillator - the level a realistic spike must reach to restore balance. |
Each successive cycle peak occurs at a lower multiple of the regression line. The regression line itself grows at roughly 40–50% per year. Price has always returned to it after both peaks and troughs.
A Shared Foundation:
Recency Weighting
Both indicators share a common weighting scheme: a 4-year exponential half-life - a data point from four years ago counts half as much as one from today.
Indicator 1:
Law Health
Concept
Law Health measures the accumulated log-proportional deviation of price from the regression line, weighted by recency. It answers: has Bitcoin spent more weighted time above or below fair value?
The log scale makes the metric scale-invariant. A 10× deviation in 2013 (at $100) registers the same as a 10× deviation today. Every cycle is treated equally in proportional terms.
Formula
Normalization (0–100 scale)
The balance has never gone negative. Even the 2015–2016 trough drained it from 8.73 down to 1.37 - but never to zero. The regression line grows so fast that even deep bear markets leave price above it for most of the decline.
Indicator 2:
Law Stress Oscillator
Concept
The Law Stress Oscillator measures the accumulated dollar deviation of price from the regression line, weighted by recency. Where Health is scale-invariant (log), Stress is dollar-denominated (linear) - sensitive to the modern era of large dollar values.
Think of it as a spring. Every month price is above regression, the spring extends. Every month below, the spring compresses. The restoring force is proportional to how compressed or extended the spring currently is.
Formula
Normalization (0–100 scale)
The Recovery Target
When the Stress balance is negative, we can estimate what spike would restore balance. Using the triangle approximation for a realistic 3–4 month spike:
What the Indicators
Are Saying Now
As of early 2026, with Bitcoin trading around $82,000 against a regression line of approximately $130,000:
Both indicators are simultaneously at or near their historical floors. In prior cycles this level of dual compression has not been observed - 2021 was the only year when both simultaneously approached their ceilings (Health at 72/100, Stress at 99/100).
The structural imbalance currently accumulated is the largest in Bitcoin's history. If the power law continues to hold, the restoring forces are at their strongest recorded level.
fully worked off.
The spring is at maximum compression.
The power law model does not predict when recovery will occur. But it does assert that the structural imbalance currently accumulated - measured by both the log-proportional and dollar-weighted metrics - is the largest in Bitcoin's history.
What comes next is a matter of when, not if - at least if fifteen years of data mean anything.
This article is for informational and educational purposes only. It does not constitute financial advice. The power law model is a historical observation and not a guarantee of future performance. Bitcoin is a volatile asset. Always do your own research.
Giovanni Santostasi (@Giovann35084111) - original power law research and regression fit
BitBo (@BitboBTC) - power law popularization and tooling
Power Law Tracker - filipas.com/bitcoin